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President of Club Med reveals how he turned around a failing business

He is unfazed by anyone who might suggest his success has been influenced by being his father's son.

The energy in the room changes when Mr Henri Giscard d’Estaing, president of the world-renowned holiday chain Club Med walks in.

A few staff members grab a word with him and the stylist’s ministrations include dusting on face powder for a shine-free photo shoot and smoothing down his already-immaculate navy suit.

I essay a “bonjour” and a few opening remarks in conversational French. Tall and bass-voiced, d’Estaing, 60, graciously brushes off my hesitant pronunciation of his surname, saying it is too difficult.

Like many captains of industry, he seems at ease with being the centre of attention, but perhaps he is used to discreet scrutiny in his native France. He is, after all, the son of a former French president.

His 91-year-old father, Mr Valery Giscard d’Estaing, was among the country’s youngest presidents, having taken office at 48 for a term lasting from 1974 to 1981. Known as VGE in France, he was a centrist politician.

The current inhabitant of the Elysee presidential palace, Mr Emmanuel Macron, is, at 39, the youngest head of state since a 30-year-old Napoleon took power.

Like his father, d’Estaing, who was born in Paris, had an early, promising triumph in politics. He later segued smoothly into the corporate world, landing a series of top corporate jobs in global brands such as Danone and Evian.

In 2003, he became the chief executive at Club Med, which has about 70 holiday resorts in Asia, Europe, Africa and the Americas.

Under his watch, Club Med survived severe losses and a bruising takeover battle, against the backdrop of a decline in tourism worldwide after 9/11 and other terror attacks. The chain is now firmly in the black, with a revitalised outlook that focuses strongly on Asia.

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FORMATIVE YEARS

D’Estaing’s stint as a local member of parliament in his 20s showed a glimpse of his future career, including an interest in tourism and a strategy that he employed decades later to turn around an ailing Club Med.

Even though politics runs in the former first family, his father’s influence was not overt, says d’Estaing, the second of four children.

His younger brother, Louis, has built a career as a French politician, having won their father’s old parliamentary seat in the early 2000s.

“My father never pushed us to be involved in politics, though he obviously supported what we were doing. We’re a family which shares liberal political ideas and applies this in its private and family life, where it is important that the children develop their own talents in their own way,” says the Club Med chief, who is married with three adult children.

At 22, he became the youngest elected person in France when he won the local parliamentary vote for a “conseiller general” (departmental councillor) for a constituency in the Loire Valley in central France.

Getting elected for a second term showed he was no flash in the pan, but his interests were already starting to shift.

The Berlin Wall and the Cold War influenced his interest in politics as a young man.

“It was a special time in Europe with the Berlin Wall and extreme tensions between West and East. There were strong ideological debates and also a time of growing unity in Europe. They were interesting times to be involved in politics,” he says, adding that he wanted to improve the quality of life for his rural constituents.

“The Wall fell (in 1989) and those debates tended to become more pragmatic debates on the economy. I thought I could probably contribute more if I went to the private sector,” says d’Estaing, who graduated with a degree in economic science from the renowned Paris Institute of Political Studies.

The burden of having a famous name prompted him to make a leap into the world of business.

“You get accustomed to it. It’s sad to say it’s also one of the reasons I thought it was probably more useful for me to go into the private sector because you can build your activities more clearly on your own merits,” he says.

The Loire Valley, where his mother’s family hails from, is a Unesco heritage site and a major French tourist region. It is sprinkled with splendid Renaissance castles and chateaux, where nobility for centuries spent their summers.

Within his constituency in the Loire Valley, d’Estaing says he “revamped and relaunched” the historic Chateau de Talcy, boosting the number of tourist visitors there. He also modernised a money-losing campsite that belonged to the local government, making its amenities and pathways “more comfortable and accessible”.

“The camping site was in rather poor condition. I decided we should move upscale and make it an upscale facility and it started to be profitable again,” he says. “It’s something that I applied to Club Med on a much broader scale.”

Going upscale, or gentrification, was a major part of his strategy at Club Med as he observed first-hand the march of the global middle class.

In his first job in the 1980s at Cofremca, a French marketing consultancy, where he worked his way up from being a part-time employee to associate director, he realised that middle-class consumption patterns and aspirations crossed national boundaries.

“At my first job at Cofremca, I studied the change in food habits in France, which was a very traditional market. In fact, these habits were changing,” he says.

For instance, traditional three- course lunches in France were starting to give way to people eating just a salad and not stopping long for the mid-day meal. He also saw the emergence of cereals beginning to replace traditional coffee-and- bread breakfasts.

“We extended those studies to other European countries and to the United States and we saw that these various changes were seen globally, with a different rhythm, with nuances,” he says.

“It showed me that when you are looking at the fastest-changing part of society, you have common trends, which has contributed to our Club Med strategy to position upscale and globalise.”

His internationally minded business outlook was reinforced after he moved to global food group Danone in 1987, where he held various positions, such as running the subsidiary HP Foods that made the iconic British brown sauce, HP Sauce, and later, CEO of Evian, the mineral water giant.

TURNING AROUND A FAILING BUSINESS

By the time he joined Club Med in 1997, he felt ready for a challenge and, when it came, it was enormous.

In the late 1990s, Club Med was facing serious difficulties and was in an “uncomfortable situation”, he says.

The resort group was seen as the most expensive in the mass-market segment and was losing market share because imitators were copying its model of all-inclusive family- friendly holidays. To make things worse, tourism was suffering after the terrorist attacks of Sept 11, 2001 in the US, which was followed by the Bali bombings in 2002 and 2005 and the global financial crisis in the late 2000s.

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To save Club Med, it was time to go upmarket to match what he felt were the tastes of the international middle class, especially with the rise of China. As president of Club Med, he was responsible for the decision to spend more than a billion euros towards this end.

“We decided to add to an upscale strategy, a globalisation strategy, to reinforce the presence of Club Med in fast-growing markets, especially in Asia, such as China, obviously, and South-east Asia,” he says.

“Running a company that had HP Sauce is a challenge, but to turn around a business is the true challenge, when you have something on the verge of bankruptcy, to make it profitable again. We had to rebuild, nearly, a new company.”

The move towards deep restructuring, which started from the end of 2001, involved spending €1.5 billion in either revamping the existing resorts or creating new ones, while closing more than 60 properties, he says.

Seeing the results of this restructuring would take years.

D’Estaing says that because he and his team wanted more control over the process, they needed to stabilise the shareholding of Club Med, which was founded in France in 1950. Back then, there was a lot of disagreement among its major shareholders over what direction to take.

Eventually, China’s largest private conglomerate, Fosun Group, wrestled control of Club Med in January 2015 after battling Italian tycoon Andrea Bonomi for about two years. It was the longest takeover fight in France’s corporate history.

Fosun’s billionaire chairman, Mr Guo Guangchang, praises d’Estaing’s business acumen in an e-mail interview.

He says simply: “I trust Henri. I have strong confidence in his plans. He is our global partner and part of Fosun Group’s decision-making team. Doesn’t this explain everything?”

As the formidably large middle class in China, the world’s most populous nation, travels around the world, Mr Guo says the group is looking “to combine China’s growth momentum” with Club Med.

There are now five Club Med resorts in China, with “more to come”, he adds.

Some 77 per cent of Club Med’s resorts are labelled premium or luxury, compared with 55 per cent in 2010, when Fosun bought an initial 7 per cent stake in the company, Reuters reported earlier this year.

  • club med
    Club Med Bodrum Palmiye, Turkey

The corner has more than turned for Club Med under d’Estaing, who spends half the year travelling. He says there are plans to open a second ski resort in Japan as well as a third resort in Indonesia, on Lombok island, within three years.

Revenue was €1.5 billion (S$2.3 billion) last year, he says, declining to disclose further figures, citing the fact that Club Med is no longer a listed company.

Work seems to be seldom far from mind for d’Estaing, whose favourite exercise is walking. When he visits the Club Med resorts, he takes the opportunity to check if anything is amiss on the premises while on his one-hour walks.

When the Indian Ocean tsunami struck on Dec 26, 2004, affecting three Club Med resorts in Phuket and the Maldives, he immediately returned to his Paris office, cutting short his Christmas family holiday. There, he organised the repatriation of a few thousand guests and employees from the resorts, but one Club Med employee in Phuket was lost to the massive waves.

The professional is the personal for d’Estaing.

“These are personal challenges because when you are confronted with risks involving human life, when you have the responsibility for the jobs of many people, when you are in charge of a company that is part of the heritage of your country, involvement goes beyond professional involvement,” he says.

He is unfazed by anyone who might suggest his success has been influenced by being his father’s son.

“I had to take over a company that was overtaken by others and it’s back to profit and growth,” he says. “Anyone can have his opinion and I respect that, but what is important to me is the achievement.”

Adapted from The Straits Times. Photo courtesy of SPH – The Straits Times.

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